Daily Ticker

Apple Backlash Hits Critical Mass But “Cheap” Stock Stuck in Limbo

A few months ago, the blogosphere was filled with amazing comparisons of Apple's size to not just other companies -- including the combined market caps of Microsoft, Google, Facebook and Amazon at one point -- but entire countries and industries as the Things Apple Is Worth More Than tumblr details.

What a difference a few months -- and a 20% decline in the share price -- makes.

Now, much less glowing comparisons are being made. Apple is being juxtaposed to fallen giants such as Eastman Kodak, Sony and RCA -- as well as the entire Japanese economy, which has gone from a dominant in the late 1980s to dormant for the past 20-plus years.

Laundry lists are being written about the problems Apple is facing, including one by Business Insider's Nicholas Carlson, who cited the following:

75 percent of smartphones out there are Android phones, and only 15 percent are iPhones.

For the first time ever, iPhone customer loyalty is declining.

Scott Forstall was suddenly booted from the company. He was the creator of iOS, Apple's most prolific inventor, and a former "CEO-in-waiting."

Apple whiffed on iPad sales during its fiscal fourth quarter.

Recent "refresh" of all big products has left them looking at 6 to 9 months of dead time.

Since that post, IDC reported Apple's share of the tablet market dropped from 59.7% to 50.4% during the third quarter. Looking forward, there are big concerns about margin pressure because the iPhone 5 is brand new and the iPad Mini is much less profitable than the bigger version.

And of course, Apple alienated everyone by dropping Google and putting its inferior mapping technology on the iPhone 5, as well as forcing its loyal customers to switch to the Lightning adapter. Meanwhile, myriad stories have been written about how the fear of higher capital gains taxes is prompting investors to dump the stock.

The airways are filled with direct predictions, including Jeffrey Gundlach's forecast that the stock could fall to as low as $425, a roughly 22% decline from Monday's close near $543.

Ed Conway , economics editor for Sky News, penned a blog entitled Dear Apple, I'm Leaving You, which is a lament from a self-described fan. Meanwhile, Michael Wolff writes "The Age of Apple Is Over" in USA Today, which feels a bit like piling on and opportunism from a very savvy writer.

Perhaps nothing reflects Apple's fall from grace more than the fake commercial by comedian and talk show host Jimmy Kimmel, who mocks Apple's product cycle and refers to the iPad Mini as "a bigger, but not gigantic iPod you cannot talk on" and ends with the tagline: "We're Apple, and you're suckers."

Separately, and perhaps more tellingly, the company's top competitor, Samsung, has brilliantly spoofed Apple's somewhat cultish following in its own advertising campaign.

Clearly, Apple is no longer the beloved underdog fighting against the Evil Empire (a.k.a. Microsoft). Heavy weighs the head, indeed.

But the reality the company is still incredibly well positioned:

iPhone 5 sales are expected to be between 45 and 50 million for the current quarter. Even BTIG's Walter Piecyk, long cautious on Apple shares, writes "product supply no longer appears like it will be an issue this quarter and there should be some carryover demand from a supply constrained iPhone 5 launch in September."

Apple sold 3 million iPads the first three days after the Mini version was launched, roughly double the amount after the second-generation full-sized iPad launched in April.

Apple is just getting started in China, where the iPhone 5 is still officially unavailable for public sale.

Generally speaking, when a company is being vilified in the popular media like this, it's usually closer to the end of a decline vs. the beginning. As Apple bulls like to point out, the stock is cheap, trading with a trailing P/E of 12.3 and a forward P/E of less than 10 based on forecasted earnings for fiscal 2014. Both measures are well below the S&P 500 multiple, even as Apple is growing much faster than the index.

Such valuation measures should support Apple stock. Notably, Doug Kass of Seabreeze Partners has reversed his prior negativity (and short position) and is now long Apple.

That said, who among Apple's shareholders bought the stock because it's cheap? A big portion of Apple's shareholder base are momentum investors, who already have itchy trigger fingers after the recent drop. For Apple to truly become appealing to "value" investors, it will have to get much cheaper or dramatically increase its dividend — something the company is certainly capable of doing. But turning over the shareholder base can be a very long and painful process and raising the dividend isn't exactly the kind of thing that gets the hearts of Apple fanboys and girls aflutter.

As my colleague Michael Santoli notes, Apple is now stuck in limbo between both growth and value investors. Before the stock swooned and sentiment turned, everyone could own it -- growth investors and others who told themselves the stock was a good value. Now, growth guys are in wait-and-see mode and the stock is not yet truly cheap enough for value investors to rush in.

Aaron Task is the host of The Daily Ticker and Editor-in-Chief of Yahoo! Finance. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com